The Asian outlook for the Rooster year

January 29, 2017

Q: What do you see as the main political, economic, social and technologically challenges in the year of the Rooster?

A: I don’t see any roosters. All I see is the big elephant in the room that everyone refers to as president Trump.

It’s going to be a very US centric year. As Trump won the election solely on one tag line – we are going to make America great again! And by every definition, even the most forgiving that can only be interpreted as a clear intention to shake up the status quo.

Q: How much of the shake up are we talking about and how might that affect Asia?

A: That’s a bit of a contradiction. As from what I have been able to make out – Trump has a pretty competent crew. Unlike Adolf Hitler who surrounded himself with delusional idiots who were all yes men – from my assessment, most of his key decision makers and advisors are very experienced, thoughtful and most importantly people who have a stellar trek record in getting things done the right way.

But if you talk about Trump in the context of Asia – the first casualty has been the TPP. That’s in the dumpster now. The second unknown quantity is how committed he is for the US to retain it’s primacy in the Pacific as a stabilizing counter balance against the rise of China – that’s not clear. I think the Japanese and the South Korean’s will demand clarity on this issue – as they don’t ever want to weaponize their atomics and much prefer status quo.

But if we look at Trumps recent interaction with Theresa May who is the post Brexit PM – he has reiterated his commitment to NATO and standing in line with retaining the sanctions on Russia. So that is a very good indication that we may choose if we like to juxtapose to what will probably pan out in Asia as well.

For the time being status quo seems to be untouched.

Q: Do you see the philosophy of Trump and Brexit spreading to Asia in the year of the Rooster?

A: Xenophobia. Parochialism. Insularity. They are not new to either the US or EU. This is not a phenomenon and the world at large is not threatened by the advent of some a Andromeda strain that transforms reasonable and sane people into Xenophobic zombies as what the mainstream press and many neo liberal denialist insist – it is a reaction to many of the inequities that have been generated by globalization and the age of automation along with the convergence of global interconnectivity.

The story is a well trodden path – many hard working EU and US workers thru no fault of their own have simply not benefited from globalization – wealth despite what the globalist continue to insist has not percolated downstream evenly. Or for that matter equitably in such way where the vast majority can still have faith in globalization as the purveyor of the good life. That is the executive summary of the times that we live in.

Say what you want of Mr Trump. Say that he likes to grab ass and tits. But even the most erudite scholar on globalization cannot deny he has a vision and within it there is a clear set of missions to ameliorate many of the corrosive effects of globalization.

Whether his vision can pass from the realm of theory to reality is another story.

One doesn’t need to be a honorary member of Mensa to make out this is one big aspect that is sorely absent from the intelligentsia of globalization – a counter argument that would revivify trust and belief in globalization as a reliable purveyor of the good life to the masses.

You know Kompf. Recently the world leaders of the G20 meet in Davos and naturally the main topic was Mr Trump – and listening to what these people had to say, mid way I could help but experience a sinking Ach du lieber Himmel! moment – because it’s like being a fly on the wall of the smoking room five minutes after the Titanic struck an iceberg and listening to stupid people arguing over the color of curtains. That’s just how terminally entrenched their denial really is to the point where it’s my belief no counter argument will ever emerge from the ranks of the globalist.

The way I see it is prosaic. Trump has won! Finito. Kaput. La fin.

Now the imperative for the global community should be to craft a new philosophy that tempers globalization with real benefits that can open the aperture of opportunities and stimulate belief in upward social and economic mobility.

But instead these so called leaders prefer to see themselves as characters in a Proustian novel circa a La Recherche du Temps Perdu. It was just an epic lamentation fest – not a logical response at all to an emerging threat.

And the threats are real. And it’s not only confine to the EU or the US. If you go to Japan, you find a lot of right wing politicians coming into power because they oppose migrant workers. Closer home. Recently Mahathir has been taking broad swipes at a China real estate development called Forest city in Johor and again he’s leveraging on race, xenophobia along with even elements of lost of sovereignty.

So this is a big problem that is global. It is not like hay fever where it’s isolated to only the US and EU.

Q: Which world leader do you think the Davos leaders should sit down for two hour lecture on? Would it be Obama? Mini Lee?

A: Obama. Well let me be frank. He set a lot of policies that takes time to produce the goodies – the gestation period is too long in my opinion. But since they were mostly structured with long term horizons – it came across as a big nothing to the masses.

As for Mini Lee I have no comment. As I have mentioned on numerous occasions – I want to be polite. So I have no comment.

But the one leader that has managed to strike a happy balance between long and short term to further economic policies is the very unlikely Najib Razak.

Now if you look at Najib, he’s been very adept at pushing thru very unpopular policies, but at the same time he has also been able to sweeten the deal sufficiently to take out the bitterness – for example in the last two years Malaysia has embarked on a pheltora of aggressive economic policies to augment the drastic fall of oil prices and to put an end to subsidizes that can no longer be sustainable if she is to compete in a post TPP economic landscape.

I’ve done my research and no one other country, not even China has been able to move at the speed that Malaysia has. Today. Consumption tax is in effect. Oil, gas and even cooking oil and very soon rice will be off the list of subsidized necessaries – now bear in mind. Not even Tunku Abdul Rahman could have all done all these things without precipitating a revolution in Malaysia. But Najib & Co has and one way in which he has been able to do this is by parlaying very successfully with China to ensure that although these painful strategies are effected – the ordinary man or shall the average villager in the kampung still has the means to retain their buying power. For example where I am, the price of kembong fish has gone up RM$20 per kilo. Most of it is weather related and supply and demand driven. But since the price of oil palm has doubled – no in the kampung feels the pain – that is because unlike Obama who has been planting red wood pines that take 200 odd years to mature. Najib has been sowing Jack the bean stalks by getting the Chinese to stockpile on oil palm – now how long this will continue I don’t know. But my point is that Najib has been able to temper the corrosive effects of globalization by not passing on the grief to the rakyat (masses).

So in my book. You don’t have to go to Paul Krugman, Michael Porter or even Gary Hamel to find a solution out the quandary of globalization and how to sell it to the masses – my point is by just making sure the ordinary man benefits and his standard of living is commensurates with the notion of dignity of labor, it is still possible for a country to be a stakeholder in globalization.

The same however cannot be said out the Western Hemisphere or even other economies nearer home especially down south – where the pain and grief of globalization is usually passed on to the end user who is constantly told he is beneficiary, but when he goes down to NTUC and his dollar doesn’t seem to produce the bang – that’s where the dissonance between what officialdom says and reality bites.

Unfortunately in the case study of Najib Razak. It’s comes so encrusted with so much Fitna and allegations concerning the 1 MDB scandal that no one would ever consider it a worthy case study to emulate – that to me is a great travesty.

I am not saying Malaysia is perfect – there are certainly the normal quadrants of winners and losers here in any implementation of radical economic policies, but by and large the Malaysians have successfully managed changed in such a way where pain may be inevitable, but suffering is certainly optional.

Infact this year due to the high prices in oil palm fruit – all my harvesters enjoyed a big ang pow. But if economic policies are so conceived in such a way where profit margins are so narrow and slim and by appearances the rich get richer while the poor remain trapped in the poverty gyre like in so many Western economies – then Brexit or Trump’s win should not be surprise.

Q: What do you consider to be the most disturbing or dangerous aspect of the new Trump administration in the year of the rooster to South East Asia?

A: Understand this! It is not what Trump proposes to change that will be dangerous. Because there is very little that he can actually change, not without incurring real penalties at least. You want to slap levies and tariffs on China? Fine, they switch from Boeing to Airbus and couple of thousand jobs in the aeronautics sector gets wiped out in Seattle. What the average American doesn’t seem to grasp is the mathematics of reality – both China and the US need each to prosper.

Let’s talk sense here. The U.S. debt to China is $1.259 trillion, at the time this blog entry makes it to the public domain on the 29th January 2017 @ 0743. 20 seconds GMT. That’s 29 percent of the $3.841 trillion in Treasury bills, notes, and bonds held by other countries combined. The rest of the $19.9 trillion debt is owned by either the American people or by the U.S. government itself – now to put it graphically that’s like a bum with only loose change in a tube of Mentos in his pocket shouting at someone with the nett worth of the Shah of Iran when he was still in power – hey we are going to hurt you!

Now how much sense does it make?

So let’s get real.

At some point in the Trump administration the TPP will have to be revived. Because believe it or not the US is the main beneficiary of the TPP – they are the ones who holding 93% of the intellectual property that they can commoditize and rent seek on – and further more when you say the combine signatories of the TPP represent 40% of the global trade – that misleads. As the US makes up 22% of that quantum – so to me the question is how will Trump effect a U turn on the TPP without derogating from his election pledge to kill the TPP.

As the US needs the TPP more than Asia with the exception of Singapore and Japan.

Q: Trump says that he prefers one to one trade pacts with countries. Wouldn’t that be a substitute to the TPP?

A: Then he has to factor in the cost of ten more Nimitz class carriers or maybe three more Ford class carriers that each come at a price tag of USD$20 billion per pop – I am not even counting in staging post along with all the accoutrements that is required to support the military infrastructure such a massive commitment to the seventh fleet. Again this is economics!

The TPP is the cheapest way to get the job done – so we are back where we once started from…how will Trump effect a U turn and bring the TPP back online.

It’s conceivable Trump may have painted himself into a corner – then again never underestimate a show man. Because they’re all very clever at pulling rabbits out of top hats.

In summary I see the year of the rooster to be quite uneventful despite the prevailing sentiment of anxiety caused by the upset of a Trump win.

My greater concern is the inexorable slow down of the Chinese economy that for some curious and incomprehensible reason doesn’t seem to feature as prominently in the main stream media as it rightly should.

And this underscore the importance of scale and perspective – because if a port worker in Tanjong Pagar or a welder in Keppel shipyard is going to retrenched – the chances are it will relate to the economic slow down in China and not Trump.

The Chinese economic planners are of course putting in place a strategy to engineer a soft landing without decimating their emerging middle class or precipitating social unrest – they are fixated on the latter. As at every turning point in Chinese history violent political change has always been presaged by economic turmoil in the form of famine or maladministration in statecraft – they read, 6.5% growth and they go wow! I wish we could grow like that. But what they don’t realize is how systematically imbalanced this growth actually is to even cancel out the good that may come from a 6.5% growth – as when one factors in overcapacity especially in infrastructure, housing and commercial space the economy is excessively imbalanced and therefore it will have to thru a correction sometime in the future.

The question is how disruptive will it be to China and rest of Asia when that iceberg breaks off.

The other more worrisome aspect of the fragile Chinese economy relates to manufacturing output – we know it’s slowing down, but what we don’t know is how many that slow down may affect the new bourgeois or nouvue riche in the new enterprenuerial class – as many have expanded their operations not only by purchasing western manufacturing capital goods – but if orders shrink and they can’t run their lines. Then how can they service their loans. So the question is what the level of defaults there and how badly might the new merchant class in a China be impacted by the global slow down. The problem as I see it is getting hold of accurate economic intelligence data – the Chinese manufacturing index is far from reliable, it’s not like the US where it’s refereed by Standard and Poor or even combed for inconsistencies by the FED and the IMF – so things are very opaque.

No one actually knows – but the Chinese economy is definitely slowing down – consumption is constricting, employment is so far not seemingly affected, but it’s not as self confident as it used to be and I think all these factors will have a preponderant effect on South East Asia in the year of the rooster.

So to put in all the right scale and perspective. I am more worried about China than the US. I don’t deny the US is certainly disproportionally much more interesting because I think Melanie Trump’s baby blue Raplh Lauren dress was certainly very chic and gorgeous. But in the larger schema – I think it will be China, China and China that will be the mainstay of my interest in the year of the rooster.

We will certainly reach in further to tap on more information on the key indicators to see where the China economy is heading in the year of the rooster.

Thank you for having me and may I extend seasonal greetings to the guilds.

Q: I am sorry but I have one last question that the Guilds are especially interested in – what advice would you give to those who joining or who are already in the job market?

A: If you’re new. Try to get into the Singapore civil service. As providing you fail traditionally – you get to enjoy a pension. But if you’re in the cut throat private sector – then I say you have to absolutely set aside sometime to invest in a strategy to start your own enterprise. As the life cycle of today’s employee is much shorter and by the looks of it, it will get shorter. Not perhaps in all vocational sectors. But most will naturally as function of the business process go thru this metamorphosis simply because of the allure of the profit motive and the perennial need for firms to find new ways to maximize value.

These days the compact between firm and worker is so transactional – that once you reach a certain age band – then you’re in their accounting books you’re a liability that they simply can’t afford.

Well some people may saw experience counts. But I say in the age of the internet where knowledge is just one tap away – that doesn’t inspire much confidence. Then there are those who believe in training – but my response to that there are issues to diminishing returns from the firms point of view.

I don’t necessarily blame the business process per se. As if the HR doesn’t ask questions like how can we make use and throw this person out in two years. They probably wouldn’t be around.

So to me the most sustainable way out of this requires a paradigm shift where one really has to see oneself as the CEO of your own branding of products and services.

It’s certainly a new way of thinking for Singaporeans. Because everyone seems to just want to ace in their exams, get a government scholarship and they’re set for life. But not everyone can make the grade and even some who do, decide to jump ship for whatever reasons.

That means workers today need to have the end in very first day when they enter the job market – they need to be curious, inquisitive and not take for granted that their jobs will always be there for them.

It can be done. If you go to Hong Kong for example and you ask young people whether they want a scholar ship and be bonded – they will say, why do I want to waste my life? I want to be Li Kha Shin. It’s the same culture in America.

I am not saying skip university. No! See it thru to it’s logical end. Get that piece of paper. Because even should you start your own enterprise one day that will certainly serve you well – all I am saying is don’t ever limit your scope of possibilities to just Singapore alone – go out, spend a year bumming around Europe in a motorbike. Sleep under bridges. Grow a beard. Step into a museum on a rainy day. Buy a train ticket and go to a place that you have never ever heard of before.

Hopefully somewhere in all that you will find inspiration for what you really want to do with your life.

Q: You decided to become a farmer. That must be pretty strange. Was that the process or route that you took to find your calling?

A: Just imagine you’re in this really hip joint where they serve Martini’s drowned in Lychees with vapors of dry ice and techno music is playing and they’re really leggy chicks and one of them turns to you and ask – where do you see yourself in five years. And you reply, I want to be a farmer.

That’s it lah! You’re not going to get any dates lah. Comimg to think of it that could be one reason why I wasn’t too hot with the girls in University.

But for me there was this time when I bought a fourth hand motorbike and decided to ride around Europe. Eventually I made it all the way to Poland. Them I said to myself, I still have enough gas – so I rode it all the way into Russia – that was just around the period when the USSR broke into a million pieces and the border was really porous. To cut a long story short – I bike died in the Ukraine. I had to work in this farm to buy a horse. It was the height of summer.

You know when you’re young – you’re impressionable and one day when I was just lying down on a haystack with the farmers daughter in my arms and we were just watching the puffy clouds go by – I said to myself, how wonderful if this day could last forever.

I guess what I am trying to say here is some times to really find one’s calling or where you want to go in life. You simply need to be get lost first.

Maybe I was just lucky I found it on top of that haystack.

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